Net income rose 24 percent to 17.9 billion koruna ($912
million) from 14.4 billion koruna in the year-earlier period,
the Prague-based company said today in a statement. The average
estimate of nine analysts in a Bloomberg survey was for profit
of 14.7 billion koruna on that basis. Sales fell 1 percent to 60
billion koruna.

CEZ posted a one-time gain of 1.5 billion koruna from
trading carbon permits in the quarter. Earnings were also buoyed
by 1.9 billion koruna from the separation of operations in
Albania, where the utility lost its license last year. These
contributions helped counter the effect of lower power prices
and enabled the company to raise earnings forecasts.

“CEZ managed to offset lower electricity prices and
production with gains on carbon trading,” Petr Bartek, an
analyst at Erste Group AG in Prague, said in a note. “The
guidance seems still somewhat conservative in the light of the
first-quarter results.”

The stock rose as much as 2.3 percent to a three-week high
of 582 koruna, and traded at 573.7 koruna as of 12:25 p.m. in
Prague.

The utility raised its full-year earnings guidance after
concluding a 50-year contract for supplies of brown coal. The
target for 2013 net income was increased to 37.5 billion koruna
from 37 billion koruna, while the goal for earnings before
interest, tax, depreciation and amortization was raised to 81
billion koruna from 80 billion koruna.

Boost Earnings

CEZ announced the sale of its Chvaletice coal-fired plant
for 4.12 billion koruna on March 19, the same day supplier Czech
Coal AS backed away from a threat to double the price of coal
for CEZ’s Pocerady plant. The Chvaletice disposal, which may add
a further 2 billion koruna to this year’s net income, hasn’t yet
been calculated into the new earnings targets as it must first
be approved by the anti-monopoly office, Chief Financial Officer
Martin Novak told a press conference.

“The two agreements will significantly contribute to the
future stability of our company as well as the stability of the
coal and electricity market in the Czech Republic,” Chief
Executive Officer Daniel Benes said in the statement.

Wind Park

The deals offset the effect of low electricity prices and a
plunge in the value of carbon permits following the European
Parliament’s rejection of a proposal to delay the issuance of
some permits last month. First-quarter Ebitda was also boosted
by about 400 million koruna from CEZ’s completed 600-megawatt
wind park in Romania.

The company presold 63 percent of its 2014 electricity
output for an average price of about 47.7 euros per megawatt
hour, 39 percent of 2015 output at 45 euros per megawatt hour,
and 15 percent of the projected 2016 output at 43 euros per
megawatt hour, Trading Director Michal Skalka said during the
press conference.

CEZ is fighting Bulgaria’s attempts to withdraw its license
for alleged violations of the public procurement law. The
national regulator said on April 16 it will make additional
checks during the next two months before making a decision.

The utility is planning to pick a supplier of two new
reactors at the Temelin nuclear power plant and sign a contract
by the end of the year. Westinghouse Electric Co. and a Russian-
Czech group led by Rosatom Corp. are vying for the contract
valued at $10 billion.